TSG.L Regulatory News (TSG)

Trans-Siberian Gold plc

Final results for the year ended 31 December 2013

Notice of Annual General Meeting

Highlights

· Production 29,670 oz. gold, 39,026 oz. silver, increases of 7.5% and 11.1% respectively

· Asacha plant processed average 12,935 tonnes per month, 14.0% increase

· $26.5 million loans rescheduled

· Asacha licence extended to 1 September 2018

Trans-Siberian Gold plc ("TSG" or "the Company") reports that Asacha's second full year of operation produced 29,670 oz. (2012: 27,588 oz.) of refined gold and 39,026 oz. (2012: 35,110 oz.) of refined silver. The main operational issue during the year continued to be high dilution in the mine, reducing the grade of ore delivered to the plant. In 2012 acomprehensive technical mine audit highlighted several factors which had contributed to the dilution problem, including stoping methods, the blasting scheme, a lack of both appropriate equipment and experienced personnel and concluded that long hole blasting, as prescribed in the mine's design, was not appropriate for some areas of fractured rock enclosing the main stoping zone planned for mining in 2012.

In 2013 the underground mine continued to implement the changes recommended by the 2012 mine audit, including changes in stoping methods, additional mobile machinery and qualified personnel and improved control of ore blasting and haulage, intended to reduce the volume of ore stored underground. The positive impact of these changes in the first quarter was partially offset by rock falls in February and March, due in part to an offshore earthquake on 1 March 2013, which affected one of the stoping areas with richer ore. In spite of some problems with grinding equipment which interrupted production for a short period, the plant's throughput and performance were slightly higher than the planned figures.

Mining and production at Asacha in 2013:

The results achieved in a test of the new mining methods in July were encouraging, that month's average grade of 7.38 g/t including ore extracted from the test area at more than 16 g/t, however it was clear that such improved results were not achievable in some areas where mine development had been undertaken in 2012. Mine development for areas to be mined in 2014 was subsequently undertaken in line with the new stoping methods to be used. The Company believes that significantly better grades can be obtained from those newly developed areas.

In August 2013, various elements of the Asacha operation were officially commissioned, including the processing plant, cyanide storage facility, tailings storage (first phase) and sludge pipeline, the water supply network and the fuel storage facility (including fuel tanks and pipelines, refuelling station and lubrication oils storage). In September 2013 the cold storage facility was commissioned, and work continues on the commissioning of the remaining elements, with the underground mine, including the adit and mine ventilation unit, a priority.

On 12 September 2013 the Federal Agency on Subsoil Use decided to extend the Asacha licence until 1 September 2018, reflecting the seven year mine life envisaged by the mine's original design documentation. TSG's subsidiary ZAO Trevozhnoye Zarevo ("TZ")intends to apply for a further extension to the licence term, taking account of the results of the significant exploration at Asacha in the period since its resources were approved by the Russian State Geological Commission for Reserves in 2002.

In the first quarter of 2014 mine development comprised approximately 867 metres, while ore extraction (including ore from stoping and mine development) amounted to 48,682 metric tonnes, the second highest quarterly total to date. Plant throughput averaged 11,788 tonnes per month (94.3% of planned 12,500 tonnes), reflecting a maintenance and repair period during February which reduced that month's throughput to 7,691 tonnes. Average dilution was 54.6% in the first quarter (2013 first quarter: 64.9%). Ore dilution in March 2014 was 47.2%, the best monthly figure in 2013/14 and we remaincautiously optimistic that dilution can be reduced further through the continued implementation of adjustments in the mining methods including reducing the diameter of drill holes, the introduction of additional supports and the use of shallow hole blasting, where appropriate.

In 2012 the Federal Service for Supervision of Natural Resources Management prescribed the implementation of two provisions of the Rodnikova licence (whose current term expires on 1 September 2014) by April 2014, first the finalisation of the design documentation, secondly the commencement of work at the deposit, failing which the federal authorities would consider the termination of the licence. Although TZ sought to comply with these requirements, it was unclear in 2012 whether there was adequate time or available funding to do so, wherefore a full impairment provision was recognised in respect of Rodnikova's deferred exploration and evaluation costs. The designing institute began work on the design documentation in 2012; however, at the lower gold prices which have prevailed since the second half of 2013, the pre-feasibility study indicated that exploitation of the Rodnikova deposit would not be economically justified. TZ intends to apply to the federal authorities for an extension in order to evaluate the cost effectiveness of various technical solutions identified by the design institute, however, in light of the uncertainty in respect of both that application and the evaluation, the full impairment provision has been maintained.

Group Mineral Resources

The Company's properties contain approximately 1.2 million oz. of gold and about 4.9 million oz. of silver in total mineral resources calculated to JORC standards. As explained in Note 4 in the Notes which follow the financial statements, the Group has made a full impairment provision in respect of the Rodnikova deposit. The resource estimate for the Asacha deposit was updated by QG Pty Ltd (QG) to the end of December 2013 to incorporate new data from mining development and to account for mining depletion during 2013. A copy of QG's report is available on TSG's website.

Asacha's Main zone hosts six defined veins. Three veins have been defined in the separate East zone, with mineralisation generally of lower tenor and width, Asacha's Resources estimates were classified according to the guidelines of the JORC Code (2012). Classification took account of data quality, confidence in geological interpretation and confidence in block estimations. Some of these aspects are necessarily subjective. Classifications were applied by digitisation of polygon boundaries between classes in long section view. Resources were only classified and reported within constrained vein volumes.

Based on the presence of the operating mine and mill, existing mine economics, the potential for incremental development access to deeper and more distal parts of the orebody, and the potential for further exploration success, QG opined that all of the vein resources defined at Asacha have a reasonable prospect of eventual economic extraction and that a comparison of reported mill production to the undiluted resource model indicates that the achieved tonnage is in line with expectation, after likely mining dilution is taken into consideration.

4 g/t cut-off

The information in this report relating to Asacha's mineral resources is based on information compiled by Michael Stewart, and that relating to Rodnikova's mineral resources is based on data reviewed by Vladislav Zhouravlev.

Michael Stewart is a Member of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. He is a full time employee of QG Pty Ltd, and has no interest in, and is entirely independent of, TSG. Michael Stewart has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a 'Competent Person' as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code).

Vladislav Zhouravlev, former Chief Geologist at OOO Trans-Siberian Gold Management, is an expert of the GKZ (State Reserves Commission of the Russian Federation) with more than 45 years relevant experience in mineral exploration.

Messrs Stewart and Zhouravlev are Qualified Persons under the AIM Rules and consent to the inclusion in this report of the matters based on their information in the form and context in which it appears.

Financial Review

The result for the year is a loss after tax of $15.7 million (2012 loss: $4.7 million). The directors do not recommend payment of a dividend (2012: nil).

Revenue from the sale of 30,889 oz. of refined gold (2012: 26,326 oz.) and 40,909 oz. of refined silver (2012: 32,964 oz.) was $43.3 million and $926,000 respectively (2012: $43.9 million and $976,000). Average realised prices were $1,402 per oz. gold and $23 per oz. silver (2012: $1,668 per oz. gold and $30 per oz. silver). Cost of sales was $46.4 million (2012: $37.2m), the 24.7% increase reflecting the 17.3% increase in oz. of refined gold sold, also higher fuel and material costs, the latter including an increase in explosives used in short hole blasting. Cost of sales per oz. gold, net of the credit from silver sales revenue, was $1,471 (2012: $1,275). Cash cost per oz. gold including depletion, net of the silver credit and excluding royalty, was $1,029 (2012:$858).

Impairment provisions totalling $5.4m (2012: nil) have been recognised against ore stockpiles, reflecting the impact of the lower gold price on lower grade material. These comprise a 100% provision of $912,000 (2012: nil) against an underground ore stockpile and $4.5 million (2012: nil) against the surface ore stockpile, reflecting the difference between its expected net realisable value at a gold price of $1,250/oz. and cost, including processing, refining and royalties. At that gold price, the processing and refining of the surface ore stockpile will be cash generative, wherefore it is expected that the entire stockpile will be processed, with some material likely to be blended with higher grade material.

The Group recorded an operating loss for the year of $13.3 million (2012 operating profit: $681,000), after recognising the $5.4 million inventory impairment provision discussed above and $296,000 impairment charges against assets under construction and exploration and evaluation expenditure at the Rodnikova property (2012: $2.9 million) and crediting an exchange gain of $1.3 million (2012: $2.1 million).Administration expenses amounted to $1.0 million in UK and $5.8 million in Russia (2012: $838,000 and $5.4 million respectively), in aggregate $6.8 million (2012: $6.3 million). Russian administration costs included the write off of non-recoverable Value Added Tax (VAT) of $750,000 (2012: $422,000) and an inventory provision of $nil (2012: $488,000).

Finance income was $14,000 (2012: $6,000). Finance costs were $3.2 million (2012: $4.1 million).

Total non-current assets decreased from $110.6 million to $99.5 million. Mining properties of $27.1 million (2012:$29.5 million) reflected $6.6 million additional mining and mine development, more than offset by depletion of $9.0 million. Property, plant and equipment decreased by $11.8 million to $63.6 million, primarily due to depreciation charges. Inventories at Asacha at 31 December 2013 comprised $2.3 million gold and silver in production (2012: $4.1 million), $5.0 million ore stocks (2012: $12.4 million), of which $2.3 million (2012: nil) has been recognised as a non-current asset and $2.6 million fuel and other materials and supplies (2012: $3.9 million), in aggregate $9.9 million (2012: $20.4 million). As discussed above ore stocks are stated net of impairment provisions totalling $5.4 million (2012: nil), comprising $2.2 million allocated against non-current assets and $3.2 million against current assets. Recoverable VAT at 31 December 2013 was $806,000 (2012: $2.1 million), all of which is expected to be received during 2014.

Loans and borrowings at 31 December 2013 totalled $28.5 million (2012: $34.4 million), comprising $26.2 million (2012: $32.6 million) outstanding under two five year facilities, totalling $43.0 million, provided by Sberbank for the development of the Asacha project, $995,000 short term loan finance (2012: $815,000), including accrued interest, provided by TSG's major shareholders UFG Asset Management (UFG) and AngloGold Ashanti Limited (AGA), $827,000 other loans (2012: nil) and $490,000 finance lease obligations (2012: $1.0 million).

Asacha mine

A further $21.9 million of capital expenditure, including contingency of $3.7 million, will be incurred in 2014 and subsequent years, comprising:

At a gold price of $1,300/oz., Life of mine ("LOM") cash costs on an all equity basis on total expected gold production of 584,000 oz. are forecast at $631/oz., before taking account of a $36/oz. credit from silver production (assuming a silver price of $20/oz. over the remaining mine life). Cash costs including all royalties and taxes (in total $53.4 million, net of VAT recoveries) on an all equity basis are forecast at $722/oz. Total costs on the same basis, after depreciation of all capital expenditure (including $30.0 million post start up) and pre-start up mining and other operating expenditure, are forecast at $1,009/oz., giving a $291/oz. margin at a gold price of $1,300/oz.

At a gold price of $1,200/oz., cash costs including all royalties and taxes (in total $41.4 million, net of VAT recoveries) on an all equity basis are forecast at $702/oz. Total costs on the same basis, after depreciation of all capital expenditure and pre-start up operating expenditure, are forecast at $989/oz., giving a $211/oz. margin at a gold price of $1,200/oz.

Events after the reporting date

On 23 January 2014 the provider of a $800,000 short term loan facility agreed to extend 50% of that facility for a further three months. The facility was repaid in full by two instalments on 27 January 2014 and 29 April 2014.

On 21 March 2014 TSG's major shareholders UFG Asset Management (UFG) and AngloGold Ashanti Limited (AGA) agreed to extend the repayment dates of their respective short term loan facilities (UFG $570,000, AGA $321,000) to 30 September 2014.

Annual General Meeting

The 2013 Annual Report and Accounts have been sent to TSG's shareholders, to be submitted for their approval at the Company's AGM, which will be held in London on 30 June 2014 at [11:30] am at the offices of BDO LLP, 55 Baker Street, London W1U 7EU.

Copies of the Annual Report and Accounts are available at the company website at http://www.trans-siberiangold.com/.

Ends

Contacts:

TSG +44 (0) 1480 811871

Simon Olsen +44 (0) 7770 484965

Cantor Fitzgerald Europe +44 (0) 207 894 7000

Stewart Dickson (Corporate Finance)

Jeremy Stephenson (Corporate Broking)

Trans-Siberian Gold plc

Consolidated Statement of Financial Position

Trans-Siberian Gold plc

Consolidated Statement of Comprehensive Income

Trans-Siberian Gold plc

Consolidated Statement of Cash Flows

Notes

1. Going concern

The Group has reported an operating loss for the year of $13.3 million. However, this is stated after significant non-cash depreciation and impairment charges. The Directors have reviewed the Group's cash flow forecast for the period to 31 December 2015 and they believe that the Group's operations will be cash generative and will not require additional funding. Achieving this forecast will require the continuation of the current gold price and current operating performance. If there are adverse developments in these areas management will be able in the short term to take steps to reduce working capital and mine development related expenditure. However, because there is relatively little headroom in the cash flow forecast, underperformance over a longer period may require management to secure additional external funding.

The major shareholders have previously provided additional funding. However, in the absence of these arrangements being in place these conditions indicate the existence of a material uncertainty which may cast significant doubt over the Group's ability to continue as a going concern and therefore that it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

2. Mining properties

Mining properties assets relate to the Asachinskoye (Asacha) mining licence held by the Company's subsidiary ZAO Trevozhnoye Zarevo (TZ).

The licence includes the right to extract gold and silver and, pursuant to the decision of the Federal Agency on Subsoil Use on 12 September 2013, its term has been extended for four years until 1 September 2018, reflecting the seven year mine life envisaged by the mine's original design documentation. TZ intends to apply for a further extension to the licence term, taking account of the results of exploration at Asacha since its resources were approved by the Russian State Geological Commission for Reserves in 2002.

In light of the fall in the gold price during 2013 and the mine's poorer than anticipated operating performance in the year the Board carried out an impairment review of the mine's economic model, assuming a gold price of $1,200/oz., an expected economic life of 10 years and a 10% discount factor, to determine whether there had been any impairment and are satisfied that no impairment has arisen.

3. Property, plant and equipment

i. Assets under construction comprise $1,781,801 (2012: $1,239,426) for building construction and infrastructure at Asacha, $78,477 (2012: $69,366) for plant and equipment at Asacha and $nil (2012: $197,361) for plant and equipment at Rodnikova. For the reasons discussed in Note 4, a 100% impairment provision has been recognised in 2013 in respect of Assets under construction at Rodnikova.

ii. $638,165 (2012: $314,328) of the depreciation charge related to property, plant and equipment used on exploration and evaluation projects or assets under construction and was capitalised in exploration and evaluation costs or property, plant and equipment in accordance with the Group's accounting policy. $1,974,209 (2012 $1,483,876) of the depreciation charge is included in inventories.

iii. The net carrying amount of property, plant and equipment includes the following amounts in respect of assets held under finance leases

In light of the fall in the gold price during 2013 and the mine's poorer than anticipated operating performance in the year the Board carried out an impairment review of the mine's economic model as discussed in Note 2 and are satisfied that no impairment has arisen.

4. Deferred exploration and evaluation costs

Deferred exploration and evaluation expenditure relates to the "Asacha East" zone, a separate orebody within the Asacha mineral rights licence discussed in Note 2, and the Rodnikova mining licence, also held by the Company's subsidiary ZAO Trevozhnoye Zarevo (TZ) which is valid until 1 September 2014.

i Additions include capitalised PPE depreciation.

Under the Licencing Agreement as revised in 2006, TZ was required to complete the exploration programme of the licence area and to submit a geological report containing reserve calculations for approval by the state geological authorities before 31 December 2008 and to prepare and permit a feasibility study for the development of the deposit before 31 March 2010. A pre-feasibility study containing the required reserve calculations was submitted in December 2008. The comments and recommendations of the State Expert Commission for Reserves were received in August 2009. During 2010 the geological report and the pre-feasibility study were completely revised taking into account further geological exploration results. The final report on Rodnikova's Mineral Reserves and the pre-feasibility study were submitted to the authorities in 2011. The Mineral Reserves report was approved by the Kamchatka authorities in April 2011. The Russian State Commission for Reserves approved the expert opinion on the Report on Reserves and Pre-feasibility study of the Rodnikova deposit on 28 October 2011, with a recommendation for underground mining.

In 2012 the Federal Service for Supervision of Natural Resources Management prescribed the implementation of two provisions of the Rodnikova licence by April 2014, first the finalisation of the design documentation, secondly the commencement of work at the deposit, failing which the federal authorities would consider the termination of the licence. Although TZ sought to comply with these requirements, it was unclear in 2012 whether there was adequate time or available funding to do so. Therefore a full impairment provision was recognised in 2012 in respect of Rodnikova's deferred exploration and evaluation costs. The designing institute began work on the design documentation in 2012; however, at the lower gold prices which have prevailed since the second half of 2013, the pre-feasibility study indicated that exploitation of the Rodnikova deposit would not be economically justified. TZ intends to apply to the federal authorities for an extension in order to evaluate the cost effectiveness of various technical solutions identified by the design institute, however, in light of the uncertainty in respect of both that application and the evaluation, the full impairment provision has been maintained.

5. Deferred tax

Deferred income tax at 31 December relates to the following:

6. Inventories

Gold in progress, silver in progress and ore stocks include mining properties depletion $180,000 (2012: $8.3 million). Ore stocks are stated net of impairment provisions totalling $5.4 million (2012: nil) including a 100% provision of $912,000 (2012: nil) against a low grade underground ore stockpile. The $4.5 million provision (2012: nil) against the surface ore stockpile, part of which has been classified as non-current inventories in 2013, reflects the difference between its expected net realisable value at a gold price of $1,250/oz. and cost, including processing, refining and royalties.

7. Borrowings

Movement in borrowings is analysed as follows:

In 2009 and 2010 ZAO Trevozhnoye Zarevo (TZ) arranged two loan facilities for the Asacha project, in total $43 million, with the Russian bank Sberbank. Repayments under the initial five year $25 million facility and the second $18 million facility, each of which bears an annual interest rate of 10.5%, commenced in November 2011 and September 2012 respectively. The loans are secured by pledges over certain moveable assets and the shares of TZ and OOO Trans-Siberian Gold Management, TSG's other subsidiary. On 20 September 2013 Sberbank agreed to extend the terms of the two loan facilities to December 2018. Repayment of the $26.5 million outstanding under the two facilities commenced in March 2014, with total repayments of $1.3 million due in 2014. In accordance with IAS39, the fees and commissions paid to Sberbank in respect of the loan restructuring are amortised over the extended terms of the facilities, resulting in a net present value adjustment of $433,000. It was agreed that a gold price hedge programme would be implemented for the revised term of the facilities, with gold price protection for the initial 12 month period to be put in place by 1 November 2013.It was subsequently agreed with the bank to defer the start of the price protection programme with an amendment to the interest rate until such commencement at an annual cost of approximately $250,000.

In September 2011 UFG Asset Management (UFG) and AngloGold Ashanti Limited (AGA), each a related party by virtue of their then respective 54.42% and 30.70% holdings in the shares of the Company, provided TSG with five short term loan facilities amounting to $8 million on commercial terms including interest at 8%, each of the five loan facility agreements

including an option for the lender, subject to the requisite approval of TSG's shareholders, to convert any part of the outstanding loan into TSG shares at a price equivalent to the volume weighted average price of TSG's shares for the period of 60 business days prior to notice of such conversion, exercisable prior to scheduled repayment 180 days after drawdown

In February 2012, three of the short term loan facilities provided by UFG and part of the short term facility provided by AGA, in aggregate $6,445,099 including accrued interest, were converted into TSG ordinary shares. The fourth UFG facility and the remaining part of the AGA facility were repaid in March 2012 and April 2012 respectively.

In June 2012 UFG and AGA agreed to provide additional short term facilities, in aggregate $781,000, also bearing 8% interest. In September 2012 the terms of the two facilities were extended to 1 March 2013, the revised facility agreements each including the same conversion option as their previous loan facilities. During 2013 the two facilities were increased to an aggregate $891,000 and their terms were further extended to 31 March 2014. As discussed in Note 12 the terms of the two facilities were further extended in March 2014 to 30 September 2014.

In consideration of a loan facility provided by UFG in 2009, the Company also agreed, subject to obtaining the necessary shareholder approvals, to issue warrants to subscribe for additional TSG shares to UFG on terms to be agreed and considered as fair and reasonable by the Company's Board (excluding those directors connected to UFG) after consultation with TSG's Nominated Adviser. No warrants were issued in 2012 or 2013 or after the reporting date.

8. Share capital and premium

All shares are ordinary shares with a par value of 10 pence.

In February 2012, 5,842,390 ordinary shares were issued to UFG Asset Management (UFG) and AngloGold Ashanti Limited (AGA) in settlement of the Company's indebtedness, in aggregate $6,445,099 including accrued interest. 3,738,665 ordinary shares were issued to UFG, 2,808,151 ordinary shares on 1 February 2012 at 69.94 pence per share and 930,514 ordinary shares on 3 February 2012 at 69.98 pence per share, and 2,103,725 ordinary shares to AGA, 1,578,620 ordinary shares on 1 February 2012 at 69.98 pence per share and 525,105 ordinary shares on 3 February 2012 at 69.75 pence per share, in consideration of the conversion of the outstanding amounts of four loan facilities as discussed in Note 7.

9. Revenue

10. Cost of sales

11. Directors' remuneration and other interests

The aggregate remuneration of the directors of the Company was as follows:

The following table shows the directors who served during the year or in the previous year together with an analysis of their remuneration:

Bonuses were awarded in 2013 to Mr Khilov and Mr Olsen in respect of their performance in 2012 but with payment deferred. It is expected that these bonuses will be paid during 2014. The terms of Mr Olsen's employment contract include a salary sacrifice arrangement, whereby, in consideration of a £22,660 (2012: £20,000) reduction in his annual salary, the Company makes contributions to his personal pension plan.

The following tables show the beneficial interests of the directors who held office at the end of the year in the ordinary shares of the Company (except for the beneficial interests of Messrs Sasson and Ryan by virtue of their connection with the Company's major shareholder UFG Asset Management) and the interests of directors in share options:

$ exercise prices are shown for indicative purposes only, calculated at 31 December 2013 exchange rates.

All options were granted in respect of qualifying services under an employee share option scheme approved by special resolution of the Company on 18 August 2008. Exercise of 50 per cent of the Options is subject to approval of the Asacha plant by the State Commission and first production of gold at Asacha. Exercise of the remaining 50 per cent of the Options is subject to the Asacha plant achieving throughput of 10,000 tonnes for two consecutive months. Both these performance conditions have been satisfied and all outstanding options are now fully vested.

12. Events after the reporting date

On 23 January 2014 the provider of a $800,000 short term loan facility agreed to extend 50% of that facility for a further three months. The facility was repaid in full by two instalments on 27 January 2014 and 29 April 2014.

On 21 March 2014 TSG's major shareholders UFG Asset Management (UFG) and AngloGold Ashanti Limited (AGA) agreed to extend the repayment dates of their respective short term loan facilities (UFG $570,000, AGA $321,000) to 30 September 2014.

13. Basis of accounting and presentation of financial information

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. However this announcement does not in itself contain sufficient information to comply with IFRS.

The financial information does not constitute the Group's statutory financial statements as defined in section 434 of the Companies Act 2006 but is derived from those accounts. The financial information for the year ended 31 December 2013 has been extracted from the audited accounts of Trans-Siberian Gold plc which will be delivered to the Registrar of Companies in due course. The auditors reported on those accounts and their report was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The financial information for the year ended 31 December 2012 has been extracted from the audited accounts of Trans-Siberian Gold plc which have been delivered to the Registrar of Companies. The auditors reported on those accounts and their report was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.